Opinion
No. 99-CA-3010
July 12, 2000. Rehearing Granted in Part and Denied in Part November 30, 2000.
APPEAL FROM CIVIL DISTRICT COURT PARISH OF ORLEANS, NO. 86-5816, DIVISION "H-12", HONORABLE PRESTON H. HUFFT, JUDGE AD HOC.
DARLEEN M. JACOBS, AL AMBROSE SARRAT, JR., JACOBS SARRAT, NEW ORLEANS, LOUISIANA 70112, Attorneys for Jill Sullivan Shaw .
ERNEST L. O'BANNON, CELESTE BRUSTOWICZ, CHRISTOPHER M. G'SELL, BIENVENU, FOSTER, RYAN O'BANNON, NEW ORLEANS, LOUISIANA 70130-2146, Attorneys for Imperial Casualty and Indemnity Insurance Company .
(Court composed of Judge Joan Bernard Armstrong, Judge Charles R. Jones and Judge Miriam G. Waltzer).
Defendants/appellants, Lloyd Azcona (L. Azcona), Rene Azcona, John Olangues, W. Paul Anderson, Curtis Everett, B.R. Eubanks, their attorneys, Henry Klein, and Gary Rouse; and Dan Foley, Clerk of Court for Civil District Court for the Parish of Orleans, appeal the judgment of the trial court which found that the plaintiff, Jill Shaw (Shaw), was the owner of an undivided one-half interest in the proceeds from a promissory note transferred to her by one of the obligees, L. Azcona.
After a trial was held regarding the ownership of the promissory note, the trial court held that Jill Shaw and Rene Azcona, L. Azcona's brother, were the actual owners of the promissory note since L. Azcona transferred his interest in the promissory note to Shaw in February 1982. After a review of the record, we affirm the judgment of the trial court.
FACTS
The undisputed facts of the this case are as follows:
The promissory note in question involved certain immovable property located on Duffossat Street that Curtis Everett (Everett) and B.R. Eubanks (Eubanks) agreed to purchase from Lloyd and Rene Azcona for $340,000 at an 8% interest rate. According to the terms of their agreement, the obligors would make sixty (60) equal monthly installment payments of $3,800 per installment, beginning on January 1, 1979, with a final and sixty-first installment due for all remaining principal and interest on January 1, 1984.
Both Shaw and L. Azcona, were married prior to the execution of the promissory note; however, they subsequently divorced in 1979. Following the divorce, both parties were engaged in a highly litigated community property and child support dispute. L. Azcona was ordered to make monthly child support payments to Shaw in the amount of $1,375. Shortly thereafter, L. Azcona was required to pay Shaw $100,000 according to a Community Property Settlement (CPS).
When L. Azcona became delinquent in his support payments, Shaw filed a Judgment Debtor Rule against him. On February 9, 1982, L. Azcona, in an attempt to avoid a garnishment of his earnings due to his financial problems, offered to assign his entire one-half interest in the promissory note to Shaw. Shaw agreed to accept the assignment the same day it was offered. L. Azcona therefore retrieved the promissory note from a safety deposit box at a local bank and accompanied Shaw to her bank, Hibernia National Bank (Hibernia), to officially transfer the proceeds of the note into her account. The parties met with one of Hibernia's representatives whereupon L. Azcona dictated to the bank official that all proceeds from the promissory note were to be deposited into Shaw's account. According to the record, Shaw began receiving all of L. Azcona's interest in the promissory note.
Notwithstanding the February 1982 transfer, L. Azcona made a second assignment of his interest in the promissory note to John Olagues (Olagues) on December 22, 1982. Shaw was not aware of L. Azcona's transaction with Olagues until November 1983. After learning of the transfer, Shaw filed suit in Civil District Court seeking to be recognized as a 50% co-owner of the proceeds from the promissory note over the Duffossat property. She also requested damages for the defendants' wrongful withholding of the note proceeds from her.
While Shaw's lawsuit was still pending, Hibernia learned of L. Azcona's second transfer of the note to Olagues, and immediately surrendered the original note and the final installment of $3,800 to the Clerk of Court for Civil District Court on March 29, 1984. When Hibernia surrendered the note, it had not received the final balloon payment from the obligees, Everett and Eubanks. Nevertheless, Hibernia's surrender of the note and the final installment payment invoked a concursus proceeding regarding the ownership of the promissory note. Consequently, the Clerk of Court sent notices to all competing assignees of the promissory note.
On June 17, 1985, Henry Klein (Klein) and Gary Rouse (Rouse), the attorneys for L. Azcona obtained possession of the note from the Clerk of Court by filing a Motion to Withdraw the Note from the Custody of the Clerk of Court. The presiding judge subsequently signed the motion. After securing possession of the original promissory note, L. Azcona and Rene Azcona received the final balloon payment from Eubanks and Everett. The funds were deposited into the attorneys' client trust account and the monies were disbursed without notice to Shaw.
Shaw alleges in her brief that both Klein and Rouse conspired to obtain possession of the note in order to circumvent her rights to her one-half interest in the final balloon payment, which she calculated to be in excess of $145,000. Because this Court does not have jurisdiction to discipline any member of the legal profession, we limit our discussion of the attorneys' conduct during the concursus proceeding to the fact that Klein received a public reprimand by the Supreme Court for his actions. See LSA-C.E. Art. 202 (B(1)(e); see also Shaw v. Everett, et al., 98-C-1964.
In November 1985, a trial was held regarding the ownership of the note in question. The presiding judge, J. Connolly, rendered his judgment on December 12, 1985, finding that Shaw was the legitimate owner of a one-half undivided interest of the note proceeds, including the final installment. The trial court noted that its decision was based on L. Azcona's transfer to Shaw on February 9, 1982.
After the judgment was rendered in her favor, Shaw proceeded to itemize her damages from the wrongful withholding of the note. Her itemization reads as follows: $145,419.03, interest in the final balloon payment; $50,000, loss of income Opportunity and Enjoyment; $300,000, emotional stress, strain and mental anguish; and $150,000, attorney's fees and legal expenses.
Imperial Insurance Company (Imperial), the professional liability insurer for Rouse and Klein, filed a Motion for Summary Judgment in 1992, stating that neither of its insureds were liable for the damages Shaw itemized in her claim. The trial court subsequently denied the motion. In 1998, Imperial filed another Motion for Summary Judgment. The district court with J. Hufft presiding denied the motion for summary judgment, stating that there existed genuine issues of material fact as to the ownership of the note; therefore, he scheduled the matter for trial on the issue of ownership alone. A supervisory writ was taken on the second denial of the Motion for Summary Judgment, but the writ application was denied as premature.
Imperial did not take supervisory writs from the first denial of its Motion for Summary Judgment.
Following trial, the district court concluded that Shaw was the legitimate owner of a one-half undivided interest in the final balloon payment under the promissory note pursuant to L. Azcona's transfer to Shaw on February 9, 1982. In addition to finding that Shaw was the 50% owner of this note, the trial court found that pursuant to LSA-R.S. 10:3-203, the transfer to Shaw in 1982 was perfected without the need for a formal endorsement or writing. It is from this judgment that the above-named defendants filed the instant appeal. The sole issue before this Court is whether all of the proceeds from the promissory note were properly transferred to Shaw in February 1982 even though neither of the parties reduced their agreement to writing and L. Azcona did not indorse the note upon delivery to Hibernia .
a. Transfer of Note
Neither party disputes that Shaw was to receive L. Azcona's interest in the promissory note following the oral transaction on February 9, 1982. It is also undisputed that L. Azcona delivered the promissory note to a representative at Hibernia with instructions that all of his interest in the promissory note was to be deposited into Shaw's account at Hibernia. However, the controversy is whether the oral assignment also encompassed the final balloon payment of $145,419.03, considering that the alleged "Azcona-Shaw assignment" was neither reduced to writing nor disclosed to the court on the record.
The defendants argue that the promissory note in question involves immovable property and that under the Louisiana Civil Code Article 3287 all conventional mortgages must be reduced to writing. Therefore, they argue that if L. Azcona and Shaw had in fact agreed to make Shaw an obligee on the note, the agreement should have been in writing. The defendants also argue that it was Shaw's obligation to prove that the assignment or modification of the promissory note had actually occurred. Here, the defendants argue that Shaw did not present any corroborating testimony to show that the assignment to her also included the final balloon payment totaling in excess of $145,000. Thus, they argue that her self-serving testimony should not override the notarized promissory note, which was executed in 1979, making L. Azcona and Rene Azcona the obligees on the promissory note.
Moreover, because the promissory note involved immovable property, the defendants argue that all modifications or alterations to the original promissory note should have been filed in the registry of the parish where the immovable is located in order to make such modifications or alterations binding on third parties. Without the February 1982 agreement being reduced to writing, the defendants argue that third parties would not be obligated to recognize Shaw as a co-obligee on the note. In the alternative, the defendants argue that L. Azcona's obligation had been extinguished because Shaw did in fact receive full payment of all debt owed to her from L. Azcona when she received the sixty monthly installments under the note. Therefore, they argue that Shaw's claim should have been dismissed as moot.
In rebuttal, Shaw argues that the February 1982 agreement between herself and L. Azcona encompassed all installments of the promissory note, including the sixty-first balloon payment. She argues that L. Azcona'a one-half interest only represented a partial settlement of his delinquent child support and community property obligations. She also argues that she would not have consented to accept the assignment if it did not include the final balloon payment.
Under LSA-C.C. art. 1848, Shaw argues that testimonial evidence is allowed to prove that a subsequent and valid oral agreement modified a prior agreement. Shaw further argues that the 1982 assignment did not vary the terms or conditions of the note; rather, she argues that the agreement only allowed her to collect L. Azcona'a interest under the note. Additionally, Shaw argues that she satisfied her burden of proof and was relieved of the requirement to produce a written contract when L. Azcona manually delivered the note to the Hibernia representative in February 1982. We agree.
According to the record, it appears that the oral agreement between Shaw and L. Azcona constituted a dation or "giving in payment." LSA-C.C. art. 2655 provides that whenever an obligor gives a thing to an obligee, and that obligee accepts it in payment of a debt then the thing given constitutes a dation en paiement. With this type of transaction, the delivery of the thing or instrument to the obligee is essential to the perfection of a giving in payment. See LSA-C.C. art. 2656.
Unilateral delivery of property by the debtor (L. Azcona) to his creditor (Shaw) will not perfect a dation; there must be consent by the creditor. See Echo v. Power Equipment Distributors, 96-1771, 96-1772 (La.App. 1 Cir. 8/7/98), 719 So.2d 79, 93, n. 8, writ denied, 98-2392 (La. 11/20/98), 729 So.2d 555. Ordinarily, a perfected dation will extinguish the entire debt; however, the dation can be a complete or partial remission of a debt. Id.
L. Azcona conceded that he entered into this agreement with Shaw because he became delinquent in his child support and community property settlement obligations and he wanted to ensure Shaw that he would honor his obligations without the need for court intervention. He voluntarily secured the note from a local bank and specifically instructed the Hibernia representative that Shaw was to receive his one-half interest in the note starting in March 1982. He did not place any restrictions on what Shaw was entitled to receive and neither party signed any documents when they met with the bank representative. Therefore, we conclude that L. Azcona intended to give his interest in the note in satisfaction of his debts, and Shaw voluntarily accepted the L. Azcona's interest in satisfaction of said debt.
b. Writing Requirement
While we agree with the defendants that Louisiana jurisprudence requires transactions involving immovable property to be reduced to writing, we, nevertheless, are persuaded that the writing requirement is not applicable in the instant case. The assignment herein does not add any additional burdens on the obligors. There was no agreement to increase or decrease the number of installments or the payment amount. Further, there was no indication that the parties intended to extend the maturity date of the note beyond 1984. In essence, the agreement between Shaw and L. Azcona affected the ownership of the proceeds from the promissory note, not the ownership of the immovable. See Riddle v. Simmons, 589 So.2d 89 (La.App. 2 Cir. 1991), writ denied 592 So.2d 1316 (La. 1992), (where the reviewing court reversed the trial court's decision to deny parole evidence that was intended to prove how the parties were to distribute rental proceeds, not ownership of the immovable).
In the case sub judice, the agreement was not reduced to writing; yet, both parties have different interpretations concerning what the agreement actually covered. Further, we note that this agreement took place outside of the presence of the parties' counsel of record. Therefore, we must give weight to the trial court's findings of fact unless they were manifestly erroneous or clearly wrong.
Even though an appellate court may feel its own evaluations and inferences are more reasonable than the fact finder's, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review where conflict exists in the testimony. See King v. Sewerage Water Board, 99-0382 (La.App. 4 Cir. 11/24/99), 747 So.2d 200, 202, writ denied, 99-3588 (La. 2/18/00), 754 So.2d 967. Because the variations in demeanor and tone of voice bear so heavily on the listener's understanding and belief in what is said, the fact finder is in the best position to determine what are the proven facts of each case. See Courteaux v. State ex rel. Dept. of Transp. and Development, 99-0352 (La.App. 4 Cir. 9/22/99), 745 So.2d 91, writ denied 2000-3214 (La. 1/28/00), 753 So.2d 834.
Likewise, we find that the trier of fact herein was the ideal party to determine whether the February assignment did or did not involve all of the installment payments, including the sixty-first balloon payment. Here, the parties testified that they perfected this agreement outside the presence of and without any assistance from their attorneys. Without any corroborating testimony or documentation to support either party's interpretation, we cannot say that the trial court was clearly wrong in finding Shaw to be the legitimate owner of a one-half interest in the promissory note.
c. Endorsement
As it relates to the absence of the endorsement on the promissory note, we agree with the trial court that such an endorsement is unnecessary when the transferor specifically gave the instrument to the bank for the specific purpose of collecting the funds and depositing them in another individual's account.
In Frichter v. St. Bernard Shooting Ctr., 602 So.2d 116 (La.App. 4 Cir. 1992), writ denied 608 So.2d 173 (La. 1992), this Court found that endorsement and delivery are necessary if the holder is attempting to negotiate the note. However, if the holder merely delivers the note to a third party, whether it is endorsed or not, the new holder or transferee is not the owner of the note but does possess the authority to enforce the note. In essence, the holder of the note can either transfer or negotiate the instrument. Of course, if the note is a bearer instrument then delivery is the only way to convey ownership to another. Yet, if the instrument is made payable to the holder then the holder can give a third party the right to enforce the instrument by delivery alone — without the need for negotiation. See LSA-10:3-203.
In FGB Realty Advisors, Inc. v. Riedlinger, 95-2276 (La.App. 4 Cir. 4/3/96), 671 So.2d 560, writ denied, 96-1299 (La. 7/1/96), 676 So.2d 101, this Court found that an endorsement was not necessary to transfer a note, considering that possession of the note was adequate for enforcement purposes. See LSA-R.S. 10:3-301. Having determined that L. Azcona did in fact deliver the note to a Hibernia representative for the purpose of enforcing the note on behalf of Shaw, we conclude that L. Azcona's endorsement on the note was unnecessary.
We pretermit any discussion on the other issues raised by the defendants, and we hereby deny the defendants' Joint Motion to Supplement the Record and their Motion to File Supplemental Briefs. As it relates to defendants' Motion to Strike Exhibits C and E from the record in this matter, we hereby grant in part the motion to strike those exhibits considering that they pertain to issues not relevant before this Court; however, the remainder of the Motion to Strike is denied.
DECREE
For the foregoing reasons, we hereby affirm the judgment of the trial court. All costs are assessed to the appellants.
AFFIRMED
ON APPLICATION FOR REHEARING.
We grant Relator's application for rehearing for the sole purpose of clarifying that Imperial Insurance Company is the professional liability unsurer for Gary Rouse only. Additionally, we delete Footnote No. 1 of this Court's original opinion since it bears no meaningful relationship to the resolution of the appeal. We further designated that our original decree of July 12, 2000, shall no be for publication. In all other respects, the application for rehearing is denied.
ARMSTRONG, J., CONCURS IN PART.
I agree with the majority opinion except that I would not omit footnote No. 1.